How to Get a Loan for a Winery in California

Wineries are thriving and expanding. Wine production and consumption is increasing steadily in the United States. The country has been the world’s top consumer for the last several years, and California wines, which account for 90% of domestic production, set a sales record in 2016 at over $34 billion. Besides engaging in wine production, they are increasingly becoming tourist destinations, with luxury accommodations, gourmet restaurants, and tasting rooms.

This strong market shows all signs of continuing, however, there are some challenges that small wineries face. One of the challenges facing small wineries is competing for market share against large producers that are already household names. Another is having to obtain financing for a business that might not appeal to all lenders. Thankfully, the Small Business Administration (SBA) offers a great option for small winery owners.

Financing Options for Wineries

Winemaking is much more highly specialized than most other forms of agriculture. It is exceptionally sensitive to local weather conditions and serves a market that is highly segmented by price, taste, place of origin and other factors. Industry financing reflects this reality. Many mainstream banks shy away from wine businesses and its complexities, leaving the field open for smaller local banks and specialized finance companies. These organizations provide abundant financing opportunities for vintners.

Financing options for the winery industry tend to focus on favorable payment options. Long terms, full amortization (no balloon payments) and flexible payment schedules are highlighted. Down payments are often in the range of 30-35%. Rates are not well publicized. A detailed article on the burgeoning industry published by The Wall Street Journal in 2015 stated that small banks are targeting winemakers with special programs that feature a range of rates depending on the borrower’s creditworthiness. It noted that underwriting standards tend to be quite strict, due to risks associated with fluctuations in growing conditions and the market.

SBA 504 Loans for Wineries

Winery operators seeking high-quality financing should give the SBA 504 loan program close consideration. The loan program is attractive for both lenders and borrowers in the winery industry. A 504 loan comes in three parts:

  • The first is a loan from a conventional lender for at least 50% of the total project amount. The borrower and that lender determine the amount and conditions of that loan, which becomes the first mortgage.
  • A Certified Development Company (CDC) such as TMC Financing facilitates a separate SBA loan of 35%-40% of the total, up to $5 million (or $5.5 if energy efficiencies are implemented), at a fixed, below-market rate. This is the second mortgage.
  • The borrower contributes 10-15% to the loan as down payment. Certain types of facilities, such as wineries and hotels, are classified as single-purpose properties by the SBA and require a 15% down payment. Restaurants are not single-purpose properties.

This partnership allows banks to share the risks of lending to a winery, and allows the borrower to finance a large portion of their expansion with a low down payment and favorable rate. The 504 loan is full amortized and features 10-year and 20-year terms, with a 25-year option expected to become available soon. The 504 loan also has favorable prepayment options.

TMC Client Successes

Folktale Winery received a $10.2 million loan ($4.2 million from the SBA) for a vineyard, winery, bottling plant, farmhouse, estate residence, land and equipment in Carmel, CA.  

“This was a natural extension of our existing wine business. Developing our direct-to-consumer business with a tasting room and special event venue was part of the plan and this property had unique location and assets,” owner Greg Ahn said. Ahn has had his own wine company since 2006.

Ahn’s company, Alcohol by Volume, was named one of the country’s fastest growing by Inc. magazine, placing 251st on its top 5000 list. The winery currently produces six wines that, besides being offered at the winery, are distributed nationally. With the purchase of the vineyard, the winery no longer has to buy grapes for production.

Frank Léal of Léal Vineyards used a 504 loan to purchase a building for $905,000 to create the Grove Restaurant at his 50-acre vineyard in Hollister, CA. The highly rated farm-to-table restaurant can seat over 300 and is surrounded by olive trees. Since opening the restaurant, Léal has added a bed & breakfast. His winery also has a number of events venues.

“Because I only had to come up with 10% down, I was able to afford to bring in a heavy-hitter chef,” Léal said. “Every year, I grow financially.” TMC “did a wonderful job of walking me through the financing end of it and that gave me more time to focus on building a concept for the restaurant,” he added.

Developing ancillary business activities, such as bed and breakfasts, is a sound strategy in this regard. The SBA strives to support small businesses and is dedicated to helping them grow and succeed. The 504 loan program offers quality financing and terms that are attractive to all parties participating in the loan.

You can find out more about the 504 loan program from one of TMC Financing’s 504 loan experts. TMC is an SBA Premier Certified Lender and a high-volume loan provider. With over 35 years of experience, TMC can help you find the financing that is best for you and guide you through the 504 loan process. Contact TMC Financing today.


Barbara Morrison, a local small business advocate and civic leader, founded her first company TMC Financing in 1981. TMC is a Certified Development Company that provides commercial real estate financing to small business owners via the SBA 504 Loan Program. TMC consistently ranks among the top certified development companies nationwide, and has funded projects worth more than $9 billion across California and Nevada. Nearly 5,000 small businesses have benefitted from this financing, resulting in the creation of an estimated 50,000 jobs. TMC is also the No.1 SBA 504 hotel lender in the United States. Barbara is also the founder of Working Solutions, a Bay Area microlender whose mission is to provide micro entrepreneurs, particularly low-income individuals, women and minorities, with the access to capital and resources they need to start a successful business.
Barbara Morrison